Entergy Arkansas is buying a portion of the Union Power Station near El Dorado, a four-unit natural-gas fired generating plant.
Entergy is buying one unit and other Entergy operating companies in Louisiana and Texas are buying the others, at a cost of $237 million per unit.
The owner of the plant filed for bankruptcy protection in August, its debts including some to a local government agency.
It’s an investment by Entergy in something other than coal. The release:
Little Rock, Arkansas – In a move that will help meet the energy needs of Arkansans while keeping costs down, Entergy Arkansas, Inc. announced today that it has signed an agreement to acquire a portion of the Union Power Station near El Dorado.
“Entergy Arkansas is focused on keeping customer rates among the lowest in the country and helping Arkansas’ economy to grow,” said Hugh McDonald, Entergy Arkansas president and chief executive officer. “The Union Power Station purchase is a significant step in the ongoing modernization of our generation fleet. It’s clean, it’s efficient, and we’re buying it at a good price. Those factors combine to help us keep rates down, keep reliability up, and maintain an environmental profile that’s among the cleanest in the industry.”
The Union Power Station, a 1,980-megawatt (summer rated) generating facility, entered commercial service in 2003 and consists of four highly efficient combined-cycle natural-gas-fired generating units, or CCGTs, each rated at 495 MW. Under the Asset Purchase Agreement, Entergy Arkansas and Entergy Texas, Inc. have each agreed to acquire one unit, and Entergy Gulf States Louisiana, L.L.C. has agreed to acquire two units.
The plant purchase price is $948.0 million ($479/kW), or $237.0 million per unit, subject to adjustments. The purchase price is approximately half the cost to build a comparable new CCGT facility. The station is owned by Union Power Partners, L.P., an independent power producer and wholly owned by Entegra TC LLC. Entergy Arkansas will operate the plant, which sits on 330 acres in Union County.
“We are also fortunate that we have the opportunity to invest in an Arkansas facility that provides high-quality jobs to our state,” said McDonald. “This acquisition complements the transmission enhancements we are planning to make across the service territory that will improve reliability for our customers.”
The purchase is contingent upon, among other things, obtaining necessary approvals, including acceptable cost recovery, from the various federal and state regulatory authorities and the expiration of the waiting period under the Hart-Scott-Rodino antitrust law. The targeted closing date is late 2015.
Entergy Arkansas provides electricity to approximately 700,000 customers in 63 counties. Entergy Arkansas is a subsidiary of Entergy Corporation, an integrated energy company engaged primarily in electric power production and retail distribution operations.